SEC Tries To Get Efficient
Under criticism for letting Bernie Madoff’s scheme drag on for years, the Securities & Exchange Commission is trying to improve itself and rebuild its image. This is an excellent idea, and good timing too, given that the people who ignored Madoff for so long have now moved on to bigger and better things.
Arresting a billionaire or two must have seemed like a good way to get started. Earlier this year the SEC went after Allen Stanford, who like Madoff operated unmolested for years. Now they have Raj Rajaratnam in handcuffs for alleged insider trading.
Rajaratnam, if you haven’t heard of him, is the founder and head of a large hedge fund firm called Galleon Group. (In hindsight, the pirate-looking ship photos on their web site might have been a clue something was up.) He was recently listed in Forbes magazine as the 559th richest person in the world with a net worth of $1.3 billion. He is charged along with several others, including executives at Intel, IBM and McKinsey & Company.
I realize the wheels of justice turn slowly. However the fact that the SEC has been wiretapping Rajaratnam’s cell phone since March 2008 and has only just now arrested him makes me wonder what they’ve been doing all this time. I also wonder why someone who is already a billionaire would get involved in a criminal scheme worth only $20 million.
Meanwhile, on a surely unrelated note, the SEC has hired a 29-year-old former Goldman Sachs employee to be the Chief Operating Officer of its Enforcement division. According to a Bloomberg story, Adam Storch will be charged with making the unit more efficient.
Some will decry the ever-revolving door between Washington and Goldman Sachs, but I will give Mr. Storch the benefit of the doubt along with this suggestion: When one of your staff attorneys investigates Bernie Madoff and finds nothing wrong, don’t give her the highest possible performance rating and don’t promote her to New York branch chief. Neither act made the SEC’s enforcement efforts any more efficient.